As the Covid-19 pandemic slowly retreats, will the economies the major cities of developed nations in particular return to their pre-pandemic ways? Will the wave of telecommuting continue and even increase in scope? The answers will take substantial time to be realized, but there are signs of change that could become permanent.
Exodus From Urban Economic Zones: Prior to the onset of the pandemic, this nation’s cities were showing substantial growth in population and rising incomes particularly in the urban centers. Then came the wave of telecommuting that caused a huge retreat from these same urban areas to the surrounding suburbs. The result has been devastation to large parts of the urban centers’ economies—particularly restaurants, taxi’s, downtown retailers, and even public transit systems. This exodus has generally been viewed as temporary, but in many shapes and forms it is taking on a look that more resembles permanency. The larger question then becomes: How important is this?
Evidence Shows That the Exodus Could Be Continuing: In comparing Google data on visits to workplaces, public transport, retail, and recreation, The Economist* has developed an index that compares mobility in larger cities with their respective countries as a whole. In several G8 countries the major cities are lagging behind their respective countries in the post pandemic return of economic activity. Rents have declined in the 300 densest urban areas, but have remained about the same in the 300 next densest areas. Restaurant business has lagged behind in major cities versus the suburbs or smaller towns. Retail operations such as Nordstrom’s and Starbucks have reported that activity has shown that a migration of business from dense urban areas towards the suburbs is taking place. In some cases, employment has risen in suburbs of large cities even where the overall employment picture for the country is down. The urban poor appear to be impacted the most with the absence of tourists and commuters.
A Double-Edged Sword: In addition to the impact on urban employment, a decline in productivity could be developing another negative result. When people are together face to face rather than communicating via email, video conferencing, and telephone, productivity tends to flourish. There’s less wasted work time and fewer problems owing to communications as people mixing with other employees in an office can get direction and help with problems quicker than working remotely.
Civic Leaders’ Efforts: The effort by city leaders in many urban areas to remedy the situation is centered around bringing residents back to the city centers. Such steps as removing vehicles from portions of cities, making it easier to set up outdoor dining, and converting unused retail space to residential space could all point to a higher quality of life for residents. Research done by Humu, suggests that one or two workdays at home per week could make some employees more productive as they could work on long-running individual tasks with less interruption, but still spend adequate face time to share ideas with fellow employees in the office.
Conclusions: Time will tell whether the telecommuting trend will continue to grow, stabilize, or drop off. But we might see some form of compromise, at least in the short run, as one or two days per week at home appears to benefit office worker productivity. As is usually the case, the urban poor are being impacted the hardest.
Sources: The Cracked Egg, *The Economist, September 11, 2021.